NZ dollar heads for 1% weekly gain on rising risk appetite

March 7 (BusinessDesk) - The New Zealand dollar is
heading for a 1 percent weekly gain amid revived investor
appetite for high-yielding, or riskier, assets as the
Ukraine tensions eased, and ahead of US jobs figures which
will likely be hit by the harsh winter conditions.

The
kiwi rose to 84.76 US cents at 5pm in Wellington from 83.89
cents at the close of trading in New York last week. It
traded at 84.84 cents at 8am, up from 84.22 cents yesterday.
The trade-weighted index rose to 79.26 from 79.08 yesterday,
and is heading for a 0.6 percent weekly gain from 78.81 last
week.

Eleven traders and strategists surveyed by
BusinessDesk on Monday predicted the local currency would
trade between 81.80 US cents and 85 cents this week. Five
expected the local currency to fall, three picked it to
advance while three said it would likely be little
changed.

The local currency rallied this week as tensions
between Russia and Western democracies eased after Russian
President Vladimir Putin backed off threats to immediately
annex the Crimean Peninsula. Meantime, US economic figures
have been weaker than expected due to the harsh winter
conditions. Traders are waiting for February’s non-farm
payrolls report today in Washington, which is expected to
show the world’s biggest economy added 150,000 jobs that
month.

“It’s more broad-based US dollar weakness
rather than kiwi strength,” said Sam Tuck, senior FX
strategist at ANZ New Zealand in Auckland. “The way
we’ve held up is pretty decent” and the kiwi may test 85
US cents, though “a lot depends on the payrolls number.”

ANZ’s Tuck said the kiwi may trade between 84.60 US
cents and 85.40 cents over the next 24 hours.

The kiwi
dollar fell to 93.22 Australian cents from 93.40 cents
yesterday after Reserve Bank of Australia governor Glenn
Stevens told politicians he doesn’t need to cut interest
rates any further. The bank kept the key rate at 2.5 percent
this week, and Australian data has surprised on the upside
with stronger than expected retail sales, trade figures and
economic growth.

Investors are eyeing next week’s
Reserve Bank of New Zealand rate review, where governor
Graeme Wheeler is expected to start lifting interest rates
to head of the threat of future inflation. Traders have
priced in a 98 percent chance of a hike at the meeting,
according to the Overnight Index Swap curve.

ANZ’s Tuck
said much of the rate hike will have been priced into the
market, though investors can’t benefit until interest
rates have actually increased.

“You’re going to get
more people investing at the higher level once the rates
have hiked,” he said.

The kiwi dollar decreased to
61.14 euro cents from 61.36 cents yesterday, and gained to
50.62 British pence from 50.39 pence. It climbed to 87.22
yen from 86.45 yen yesterday.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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